Blockbuster throws its hat into the set-top box ring

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Blockbuster got into the set-top box game right in time for the holiday season with a new digital media player that brings fewer but newer titles from the Web to TV six months after arch rival Netflix launched its $99 Roku set-top box. Netflix followed that launch with similar partnerships with Tivo, Samsung, LG Electronics and Microsoft.

And that’s just the tip of the iceberg. While the number of people who watch movies or TV via the Web is still small, media and technology executives believe a host of new technologies will make Web to TV a mainstream staple. Vudu already sells a $299 set-top box that lets users download TV shows, while Microsoft’s Xbox 360 and Sony’s PS3 game consoles can also be used to download programming from the Web for TV viewing.

Apple of course is trying to take a bite of the market with its Apple TV device that lets viewers download shows from their computers onto their TVs.

This could save consumers a lot of money– bypassing the need to pay hefty cable fees — and a lot of time when you factor in all the hours spent watching commercials. These devices do require fast Web connections, but market researcher Gartner forecasts there will be 499 milion residential broadband subscribers globally by 2012, up from 323 million at the end of 2007.

Blockbuster said its MediaPoint set-top box, made by broadband device maker 2Wire, allows customers to download high-definition quality movies to their TVs via broadband lines for $1.99 apiece, after an initial $99 for the box and 25 films.

Consumers have 30 days to watch a film once it is downloaded to the set-top box, and must finish watching it within 24 hours of pushing the “play” button. The service, called Blockbuster OnDemand, can be ordered at http://www.blockbuster.com beginning on Tuesday.

Unlike Netflix’s “Watch Instantly” feature, which streams movies to subscribers’ TVs or personal computers, the Blockbuster on-demand service will be open to customers who do not subscribe to its DVD-by-mail service, Blockbuster Online. Blockbuster Chairman and Chief Executive Jim Keyes said the company’s longtime emphasis on new releases draws different consumers than Netflix subscribers, who are directed by its Web site to older catalog titles.

The service is essentially a rebranding and expansion of Blockbuster’s Movielink.com Web site, which offers about 10,000 on-demand movies for download to personal computers. About 2,000 of those titles, such as recent DVD releases “Forgetting Sarah Marshall”, “Sisterhood of the Traveling Pants 2″ and “Get Smart”, can be downloaded to TVs via Blockbuster OnDemand, the company said.

Blockbuster’s also looking into packaging the new service with Blu-Ray DVD players and is considering alliances with video game console makers, but is not ready to disclose the details.

Boy I bet there is a lot of pent-up demand for yet-another-movie-download box. The quality and quantity of TV programming on the Web has improved substantially but viewing that content on your big-screen TV is still an unmet need.

Author Profile

I cover the media sector, focusing mainly on Walt Disney Co and other big entertainment firms and the digital evolution that is currently reshaping that industry. Prior to this assignment, I covered the music industry, energy markets, commodity markets and corporate bonds. Before moving to Los Angeles in 1995, I held positions in the New York bureau and in Pittsburgh, PA.